Tesco sales leap despite squeeze on United Kingdom shoppers

The supermarket said fresh food performed particularly well with volume growth of 1.6%, while food like-for-like sales saw growth of 2.7%.

Tesco Plc posted its strongest United Kingdom sales growth in seven years as the supermarket leader played to shoppers' desire for healthier foods and resisted raising prices as much as rivals.

The acceleration in Tesco's United Kingdom sales was mainly driven by fresh food, where the company noted there was "significant market outperformance".

The performance was driven by 1.3 percent growth in customer transactions, 10 million more year-on-year, and by volume growth in fresh food of 1.6 per cent.

Commenting on its first quarter results, Mr Lewis described current market conditions as "tough" but said: "This is a good start to the year, with our sixth consecutive quarter of positive like-for-like sales growth across the group".

"Tesco is also facing the prospect of a rise in pension contributions because its scheme valuation is rather inconveniently taking place now, when interest rates are low and inflation is rising, both of which will serve to magnify the deficit".

The market share gains, however, contrast sharply with the broader United Kingdom retail backdrop, where overall spending fell at the fastest pace in four years last month, according to data published by the country's Office for National Statistics Thursday.

It has stated that it is working with suppliers to protect customers from inflationary pressures and pledged shoppers will see further price reductions, focused on fresh food and healthy products.

UK & Republic of Ireland like-for-like sales up 2%.

"At the moment inflation in Tesco is significantly below the market trend", he said.

Bernstein analyst Bruno Monteyne said Tesco's inflation number "reflects working together with suppliers, not margin compression".

Retail Remedy's Phil Dorrell added: "Tesco are on a roll in getting their customer mojo back; stores are easier, more engaging and comparatively better value than a year ago".

Tesco, which has a share of around 28 percent of the United Kingdom grocery market, says it is not passing on as many cost increases to shoppers as its competitors.

The FTSE 100 company said that as a result, group expectations for first half revenue, profit and free cash flow remained unchanged from that provided at its annual general meeting in May.

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